While I was looking at the Dell mini laptop, I couldn’t help but notice their full size 15" Studio laptops.  Those look very nice.  I think I must be drawn to them by their thin size and similar features to the Dell XPS laptops.  In the end, I didn’t buy either of them.

A little while later I started looking at new cel phones.  My contract is up in April and I’m probably going to switch away from Sprint.  I never thought I’d say this, but I’m seriously considering an Iphone.  Of course, I’ve got a lot of time to lust after an  Iphone since my contract doesn’t expire until April.  I went to ATT’s website and chose the phone and calculated out what it would cost each month to use it.  For a family plan with 2 phones I’d be paying $83 a month (with corp discount) before all of the extra fees.  That includes texting and unlimited data (because why on earth would you get an Iphone without unlimited data access?).  The price also includes a standard phone for my wife.  Currently we pay about $55 for two phones (including fees) so this would be a drastic increase in cost.  Is it worth it?  I don’t know but I’ve got a few months to decide.

Last night as I was watching Seinfeld episodes on my Tivo, I decided to surf the web with my laptop.  Last weekend I DJ’d a  party at our lake community and it was a BLAST.  I’ve done this a couple times before and always really enjoyed it.  I started thinking last night, "It sure would be cool to have some lighting effects next time".  Without hesitation I was off to Ebay to look at what was out there.  I searched for "DJ lights" and found a ton of very cool lights.  My favorite are the LED versions that move around and throw tons of light on the floor.  The good news is that they are only $69 plus shipping.  I didn’t buy one.

I was able to squash all of my shopping impulses yesterday but I have to admit there were a few close calls.  I need to come up with a method for shocking myself back in to reality.  Sure, I’d love to have any of these things but I’d love to have my house paid off even more.  A new laptop or DJ light won’t help me quit my job earlier.  It certainly won’t help me pay off my house sooner.  I think I might make a card with a simple question on it.  "Will this purchase help me meet my financial goals?" 

Got any ideas for a better question for the card?

Anyway, I was walking down the hall of the school when I recognized some neighbors that live a couple blocks from our house.  They live directly across the street from a house I posted about previously.  The people that bought that house paid $614K for it about a year ago.  Apparently they got over their head and then decided to sell.  Unfortunately the market fell out from underneath them during the short time that they were there.  They tried selling at $599K, and then lowered it all the way down to $539K.  The house didn’t sell and they moved out almost two months ago.  The "for sale" sign sat out front listing the home for sale but nothing seemed to happen.  The sign is gone now.

So, like I was saying, I saw the neighbors across the street from this house and happened to overhear them as I walked by.  They were explaining to another neighbor that the people had moved out and took all the fixtures, sinks, trim etc from the house.  Apparently they took pretty much anything that was or wasn’t nailed down.  I had read about this but had never actually seen it happen.  In other areas, I have read that banks would offer a couple thousand dollars if foreclosed homeowners left the home in good condition.  Apparently these folks didn’t get that offer.

I completely disagree with these people’s actions.  Because they overpaid for a house that they couldn’t afford, they decided to punish the lender that gave them the money to move in.  Maybe the lender shouldn’t have loaned them the money, but ultimately these people made the decision to sign up for terms that they couldn’t afford.  It’s just morally wrong to screw the mortgage company like that.  Geez, I don’t even like mortgage companies very much and I still think it’s wrong!  Bottom line is that the bank is going to take a huge loss on this house and the neighborhood is going to have to watch the house deteriorate until someone buys it and fixes it up.  The crazy thing is that it was a beautiful house that needed nothing.  Now it’s a house that needs PLENTY.

Here are the key mistakes people can make:

1) You ignore your bills

2) You don’t look for errors in your bills

3) You don’t negotiate the price down

4) You’re embarassed to ask for financial assistance

5) You don’t work out a payment plan

Anyway, go check out the article.  It’s worth the few minutes it will take to read.

http://www.brokegradstudent.com/carnival-of-personal-finance-167-highlights-from-the-beijing-2008-olympics/

I’m disappointed to tell you that I had to pay my brother in law $10 last week.  It’s a long story but is filled with many mouth stuffing incidents.  You see, they had a party out at the lake.  I drank too much and ate too much after being good all week.  That was all it took to pop my weight back up prior to the weigh in.  During the party I actually found myself thinking, "This is so much fun, it’s worth the $10".  Talk about terrible.

Besides that one "slip up", I’m actually doing well.  We are keeping a spreadsheet with the weekly weigh in numbers and I have charted those out so that we can follow our progress along a trend line (goal vs actual).  I was above the line once (when I had to pay my brother in law) but I’m now tracking on the line and should be able to keep myself below it from here on out.

Psychologically it was quite painful to pay the $10 to my brother in law.  It wasn’t because of the money, but was more because I had gone in to this with the goal of not paying him anything.  I underestimated how strong the temptation to eat and drink would be.  I suppose it’s a good lesson for me and I’m hoping to use that week as a reminder of why I need to keep on track.  I’m still much happier to pay my brother in law for slipping up than to pay a weight loss company every week.

http://www.cockeyed.com/citizen/found/found.php

A few of my other favorites from over the years:

The torn up credit card application:

http://www.cockeyed.com/citizen/creditcard/application.shtml

Altering the menus of restaurants:

http://www.cockeyed.com/pranks/menu/menu01.html

The "Work at Home" Herbalife report:

http://www.cockeyed.com/workfromhome/workfromhome.html

1) Retire at 65 and do absolutely NOTHING

This is the least attractive scenario for me.  The magical number of 65 would (in theory) give me access to medicare if it’s still around.  It would also give me a longer saving horizon giving more of my money time to compound.  If I retire at 55 with $1 million, waiting until 65 could increase the number to over $2.3 million without contributing another cent.  That assumes I get 9% on my money, although that may be aggressive considering I’ll be less interested in the risk to get a 9% return.

I really don’t want to wait until I’m 65 to quit working.  Frankly, I don’t like work and would much rather pursue other interests.

Pros:

• Longer saving horizon
• More health care options
• Less risk in outliving my money

Cons:

• I’d have to wait until I’m 65
• Less quality years ahead of me
• Life is short
• Less time to pursue other interests

2) Retire at 55 and Do Nothing

This option sounds pretty darned attractive to me but I’m concerned I’d get pretty bored and I KNOW I’d annoy the heck out of my wife while trying to keep busy.  This option also carries a lot of risk in it.  While we are saving pretty aggressively, we aren’t saving aggressively enough to live on our money for 35+ years.  If things went well in the economy, we could probably pull it off, but I’ve proven to myself that I’m pretty darned risk averse and would like to have as much cushion as possible.

55 is a good age to stop working, but I just don’t know what I’d do with the time.

Pros:

• No longer a slave to a job I’m not too excited about
• More chance to try new things and explore the world
• Potentially many quality, healthy years ahead of us

Cons:

• What do we do about health care?
• How would we make our money last?

3) Retire at 50 and get a lower paid job in an industry that I am interested in

There are lots of jobs out there that I would love to do but the money is terrible.  We just couldn’t live on the salaries that these jobs pay.  I think this option is probably the most practical and interesting option of the 3.  If we scaled back our consumption and had our homes paid off, we could easily live on much less than we do today.  Our only bills would be taxes and ongoing living expenses like power, water, cable etc.  By retiring (aka switching careers) at 50, we could work less, and do work that was more meaningful to us.  This option would also give us access to health care options that we wouldn’t have if we sat at home.

We are on target to pay off our houses before we turn 50 and we don’t maintain any other debt so this option is actually quite achievable.  The only gotcha here is that our daughter will just be going in to college.  We are hoping to offset that by investing today in a 529 plan for her.

Pros:

• Pursue work that we enjoy
• Access to health care options
• More time for hobbies and other interests
• Use much less of our invested assets due to income from the low paying jobs
• More time for invested money to compound

Cons:

• Quitting your high paying job while your daughter is in college doesn’t feel too good
• May not have as much time to travel and enjoy "retirement"

Real estate in various parts of Arizona is dirt cheap these days.  Mind you, that comes from someone living in the Seattle area where prices are much higher.  In 2006 the median price of a home in the Seattle area peaked around $400K.  That has come down a bit since then but it’s still much higher than the price of many new homes in Arizona.  The median price of a house in Arizona in 2006 was half of Seattle’s.  I found brand new housing developments down there with houses starting in the $110K range.  During the real estate "run up" that we’ve experienced over the last X number of years, the prices in Arizona seemed to be going crazy.  Just like Vegas, reality is setting in though.

Over the years I’ve also realized that owning a second home isn’t a low cost endeavor.  Whether it’s used as a vacation home or a rental, there are many monthly costs to contend with.  Since long distance landlording (Hey, did I just make up a new word?) doesn’t sound very appealing to me, I’d most likely just sit on the property and let it drain my bank accounts.  For my personality profile, being a landlord just doesn’t feel like a good fit.

So what am I doing instead?  Well, for starters, I’m saving money.  On top of that, we have the second home out near the lake that we are enjoying during our younger saving years.  By my estimation, we’ll be able to sell it as we get closer to retirement age and use the proceeds to buy a place in Arizona.  Who knows.  By that time, we may decide to invest the proceeds of the sale and just rent a place there in the winter time.  The important thing for us now is to keep on task by saving and watching our spending so that we have all of the potential options open to us later.

The second reason I’m shopping around is because of a massive insurance claim I handled for my parents over the last 1.5 years.  In December of 2006 my parents had a massive fire at their home.  Two weeks later my dad passed away.  Once we got over the shock of both of those events it was clear I needed to step in and handle the rebuilding of my parent’s home.  I learned a TON through the process and one thing has haunted me since going through that.  It was early in the process and I had a couple contractors in the house giving me estimates.  As the two contractors wandered through the house they ran in to each other and one said to the other, "I wouldn’t even want to bid this job if it was Allstate."  Yikes.  The other contractor chuckled and nodded his head in agreement.  Between that comment and the outstanding job that Hartford insurance did managing my mother’s claim, I’ve known for awhile that I needed to explore other options.

So I called an insurance agent today to see whether the rates I’m getting and the coverage I have is right for my family.  I gave them some basic information and am waiting for them to email me a quote from 6 other companies, including Hartford.  If Hartford is the same or cheaper than Allstate, I’ll probably switch.  In the end Hartford paid a very large sum of money to rebuild my mother’s home and reimburse her for her lost personal property.  They didn’t try to nickel and dime my mother and were fair about pretty much everything that we asked for.  I think the most amazing thing they did for us was to hire an outside contractor to come in and inventory the 24X60 garage to help us identify all the things that we needed to claim (and believe me, there was a TON of stuff in there).  Other insurance companies might have just told me to fill out the personal property form.  That one decision that the Hartford claim adjuster made to get a "post fire" inventory company to come in and sift through the charred property increased my mother’s settlement by over $50,000.  It’s completely unrealistic to think that I could have sifted through all of my dad’s stuff in that garage.  He had thousands of things in there and I wasn’t in the emotional state to be able to try to identify each and every item.  As it was, I spent way too much time in that burned out structure and it was incredibly difficult because it brought back so many memories.  Having someone come in and document everything that was there was like having an angel from heaven drop in.

What am I getting a quote on?  We currently have policies on our main home, our lake house, both of our cars, a boat (for the lake), and an earthquake policy on our main house.  Needless to say, we are paying a pretty decent chunk of coin for insurance every year.  Getting competitive prices is probably long overdue.

What I can’t tell from all this is when the crisis starts.  Is it time to panic yet?  I’ve been practicing running around the yard yelling, "We’re all gonna die!!!!" so that I’m ready when the time is right.

Seriously though.  How do we work our way out of this tough spot?  Does it just take time for the magic to happen?  Do we just hold on and keep doing what we’re doing?  My gut tells me NO.  The only solution that I can see is for a drastic change in behavior at the consumer level and at the governmental level.  We need a drastic change in strategies here.  The longer we wait to face our reality, the worse it’s going to be.

I read an article yesterday that talked about how a depression might actually be good for our country.  After the initial shock that someone might think that, I read on.  The author’s point is that we need a shock to our system.  We need people to experience the pain of not having everything in order to alter their behavior.  It’s hard to argue that something isn’t needed to change people’s approach to money management.  While I don’t want to see our country go in to a depression, part of me wonders if we are headed there no matter what.  If you only read one article that I’ve linked to here today, I’d make it the link in this paragraph.